IN THE LAHORE HIGH COURT LAHORE

(CONSTITUTIONAL JURISDICTION)

WRIT PETITION NO. 7092/2010

Re:
CAPITAL INDUSTRIES (PVT) LTD. & ANOTHER
Versus
STATE BANK OF PAKISTAN & 3 OTHERS

REPLY ON BEHALF OF THE RESPONDENT NO. 4 (MCB BANK

LIMITED) TO THE WRIT PETITION FILED UNDER ARTICLE 199 OF
THE CONSTITUTION OF PAKISTAN, 1973

Respectfully Sheweth,
1. That the instant Reply on behalf of the Respondent No. 4 (MCB BANK
LIMITED or THE BANK) is being filed through two attorneys duly
authorized by the Power of Attorneys executed in their favor by the __________
of the Bank who/which is competent to execute the said Power of Attorneys vide
powers conferred pursuant to the Board Resolution dated _____________ passed
by the Board of Directors of the Bank. The said Attorneys who are also the
officers of the Bank are conversant with the facts of the case and are empowered
and able to appear before the Court and answer to and depose about any matter

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connected with and/or arising out of the facts of the case. (The aforesaid Power of
Attorneys dated _____________ and ___________ and the Board Resolution
dated __________________ are attached herewith as Annex- A/1, A/2 and A/3
respectively. The Memorandum and Articles of Association of the Bank are
attached herewith as Annex-A/4 and A/5 respectively).

PRELIMINARY OBJECTIONS
A. That it is submitted with greatest humility that the instant writ petition has been
wrongly filed before the Principal Seat of this honorable Court at Lahore. It is
submitted that the main contesting Respondents in the instant writ petition are the
State Bank of Pakistan (the SBP) and the Ministry of Interior, Government of
Pakistan (the MOI). As is apparent from the addresses given in the body of the
Petition, the SBP (alongwith Respondent No. 2 which is one of its officials) is
resident at Karachi, while the MOI is resident at Islamabad. The cause of action
(inclusion of Petitioners name in the list maintained by the Credit Information
Bureau of the SBP) has also arisen at Karachi. It is further submitted that the
second cause of action, if it ever arose, would arise in Islamabad as MOI is
resident at Islamabad. According to the well settled principles of the assumption
of jurisdiction by different benches of the same High Court, it would be most
convenient for all the parties and the adjudicating honorable Bench itself if the
writ petition is filed before the Karachi bench of the Sindh High Court where the
SBP has its office and the MOI and the Answering Respondent are also
represented there. In any other case, the writ petition could have been filed most
conveniently to all the parties and the honorable adjudicating Bench, before the
Rawalpindi Bench of the honorable Lahore High Court. In view of the foregoing
discussion, it is most respectfully submitted that the instant writ petition is liable
to be returned/dismissed having been wrongly filed before this honorable

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Bench/Court. The Petitioner, if so advised can file the Petition afresh before the
proper forum of competent jurisdiction.
B. Without prejudice to the above, it is respectfully submitted that the writ petition
under reply is liable to be dismissed as it is bad on the ground of multifariousness
or the misjoinder of the causes of action. It is submitted that the Petitioners have
three distinct causes of action which they have tried to deal with in a single writ
petition which is not permitted under law as it will embarrass the trial of the case,
confound the issues and evidence and thereby waste the precious time of this
honorable Court. It is submitted that Petitioners have mentioned three grievances
in the writ petition under reply; firstly, the inclusion of Petitioner no. 1s name in
the List maintained by the Credit Information Bureau (the CIB) of the SBP;
secondly, apprehension of Petitioner no.2 (not yet materialized) of inclusion of his
name in the Exit Control List (the ECL) maintained by the MOI; thirdly, the
apprehension of Petitioner no. 2 (not yet materialized) of being incarcerated under
section 55 of the Code of Civil Procedure, 1908 (the CPC) if Petitioner no. 1
commits default in fulfillment of its obligations towards the Answering
Respondent. It is submitted that all the aforementioned grievances are distinct and
although they may have a superficial connection or relation with each other yet in
substance each cause of action arises out of distinct set of acts of commission and
omission of the Petitioners governed by different set of laws and rules. It is
further submitted that the Respondent in each cause of action is different: CIB
(the SBP); ECL (the MOI); section 55 (Respondent No. 4---the Bank). In this
view of the matter, the clubbing together of such disparate causes of action and
respondents under one writ petition would spell disaster for all concerned and will
not only embarrass and confound the trial of the writ petition but also cause great
deal of inconvenience to the parties.
C. That the writ petition is not maintainable as the Petitioners are not aggrieved
persons in relation to the aggregate of the cause of action in the writ petition

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under reply. It is submitted that in relation to the grievance related to CIB,

Petitioner no. 2 is not an aggrieved person. Similarly, in relation to grievances
relating to the ECL and section 55 of the CPC, Petitioner no. 1 being a juristic
person, cannot be an aggrieved person in relation to the said grievances. The writ
petition therefore is liable to be dismissed as being filed by persons who are not
aggrieved persons within the meaning of the provisions of Article 199 of the
Constitution of the Islamic Republic of Pakistan, 1973.
D. That in continuation of the last paragraph, it is further submitted that the writ
petition is liable to be dismissed as being filed pre-maturely. It is submitted that
neither Respondent No. 3 (MOI) has taken any adverse action against the
Petitioner no. 2 nor the Respondent no.4 (the Bank) has yet filed any application
for the arrest of Petitioner no. 2 for failure of Petitioner no. 1 to satisfy any decree
passed against it in the MCB-Suit (Suit No. 66-B/2009 pending adjudication in
the Lahore High Court Lahore under the provisions of the Financial Institutions
Recovery of Finances Ordinance 2001). The reliefs sought in the writ petition are
therefore against imaginary grievances as no evidence has been submitted
alongwith the writ petition justifying the apprehension of the Petitioners that
coercive illegal action shall be taken against him in near future by the
Respondents. In view of this lacuna, and in accordance with the settled principles
governing the exercise of the constitutional jurisdiction, this Court will decline to
settle academic questions which do not relate to any concrete issue before the
Court.
E. That writ petition is liable to be dismissed on the ground that the issue relating to
the inclusion of Petitioners name in the list maintained by the CIB has already
been raised and agitated by the Petitioner in the CIL-Suit (Suit no. 56-B/2009,
pending adjudication in the Lahore High Court Lahore under the provisions of the
Financial Institutions Recovery of Finances Ordinance 2001). In this regard,
reference is very respectfully made to page 75 of the writ petition under reply

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where in paragraph (d) of the prayer, Petitioner no. 1 has prayed for issuance of a
direction restraining inclusion of its name in the list maintained by the CIB. It is
therefore established that the controversy raised herein is already pending
adjudication before a Court of competent jurisdiction. The Petitioner no. 1 is
precluded to reagitate the controversy through the instant writ petition.
F. That writ petition is liable to be dismissed on the ground that by filing of the
instant writ petition, Petitioner no. 2 is in effect trying to circumvent and pre-empt
the due course of law. It is submitted that no evidence worth name has been
presented alongwith the writ petition which may serve to support or justify
Petitioners apprehension that Respondent No. 3 is considering the inclusion of
Petitioner no. 2 name in the ECL. Even if such apprehended action is taken, it has
been consistently laid down by the superior courts of this country, the remedy for
the aggrieved person is to approach the Federal Government in review and not the
constitutional remedy sought to be invoked by the Petitioner. The Petitioner
therefore by filing the instant writ petition is trying to do something which has
been determined by law to be done in another mode and manner. The writ petition
therefore is not maintainable as efficacious, alternate remedy is available to the
Petitioner in relation to the ECL grievance.
G. That writ petition is not maintainable in so far grievance of Petitioner no. 1 is
concerned in relation to inclusion of its name in the list of defaulters maintained
by the CIB of the SBP. It has been consistently held by the superior Courts of the
country that only a banking court functioning under the provisions of the
Financial Institutions (Recovery of Finances) Ordinance, 2001 has exclusive
jurisdiction to determine the status of a person as defaulter or otherwise. The
Petitioner no. 1 through the instant writ petition seeks removal of its name from
the list of defaulters maintained by the CIB of the SBP (the CIB-List) by
practically getting itself declared non-defaulter by this honorable Court in its
constitutional jurisdiction. It is humbly submitted that unless a person is declared

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a non-defaulter, its name remains available for inclusion in the CIB-List. The
practical and perhaps only way of removal of Petitioner no.1s name, which is a
self-proclaimed defaulter, is to declare it a non-defaulter, which it is submitted
can only be done by a banking court as submitted above.
H. That it is submitted that the bona fides of the Petitioner is the foremost
consideration that weighs with the Court while taking up a case under its
equitable jurisdiction. It is submitted that when the first Chancellor took up the
first case under equitable jurisdiction in the Fourteenth Century Anno Domini till
the fusion of equity and law jurisdiction in 1875 and thereafter consistently under
all Constitutions promulgated in Pakistan, if any rule of law and practice has
continued its existence in an unchanged form, it is that one who seeks equity must
come to the Court with clean hands. It is submitted that not only the writ petition
under reply has been filed for ulterior purposes but the Petitioners have not come
to this honorable Court with clean hands as they are guilty of misstating and
twisting facts and concealing material facts bearing upon the merits of the case
from this honorable Court. It is submitted that Petitioner no. 2 hails from a family
of somewhat notorious speculators well know in the stock-markets of the country.
Eversince the acquisition of the majority shares of the Adamjee Insurance
Company Limited (AICL) by the Answering Respondent, the Petitioners are
smitten by all the negative emotional states prohibited in the Decalogue, i.e. envy,
covetousness, lust, etc. The present writ petition is also an effort by the Petitioners
to harm and damage the reputation and business of the Answering Respondent
especially by trying to evade the liabilities and obligations which the Petitioners
are bound to discharge under the law. It is submitted that all issues raised herein
are sub judice before Courts of competent jurisdiction. The issues relating to ECL
and section 55 of the CPC are non-issues as no adverse action is yet taken against
the Petitioners who are boxing with the shadows merely. The only purpose of
filing the writ petition under reply is that Petitioner no. 1 has no intention to fulfill
its obligations any further under the interim decree passed in the MCB-Suit. The

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writ petition is being used as a ploy to exert pressure upon the Respondents to
desist from taking any action against the nefarious activities of the Petitioners.
I. That writ petition itself is based on false and contradictory premises and liable to
be dismissed on this ground alone. The Petitioners have submitted in the writ
petition that in the MCB-Suit an interim decree amounting to Rs. 120.00 million
was passed under a consensual arrangement, the second limb whereof is that
Leave to Appear and Defend the MCB Suit has been granted to the Petitioners
herein to the extent of Rs. 109.465 million. The Petitioners further allege that with
regard to the interim decree, a payment amounting to Rs. 70.00 million has
already been duly made while as regards the amount of Rs. 109.465 regarding
which Leave has been granted, Respondent no. 4 has enough security at hand in
shape of pledged shares of Pakistan International Airlines Corporation (PIAC) and
Diamond Industries Limited (DIL). On the basis of the foregoing facts (esp. on
the basis of the alleged security in the hands of the Bank), the Petitioners make
out a case for exclusion of their name from CIB-List and ECL. It is submitted that
this is the grossest distortion of facts and a complete volte face that Petitioners
have made in the writ petition under reply. As a matter of record it is submitted
that Petitioners have never recognized that the shares of the PIAC and DIL were
ever validly pledged with the Bank. In fact they say that the said shares never
came under effective lien of the Bank and the Bank therefore has no power to sell
them under section 176 of the Contract Act. Reference in this respect may be
made for instance to the contents of para 9 appearing at page 106 of the writ
petition under reply. Reference is also made to writ petition no. 10260/09 filed by
Petitioner no. 2 and presently pending adjudication in this honorable Court titled
Yousaf Waqar versus Federation of Pakistan where pledge of any kind as
security is flatly denied. In view of the foregoing, the Petitioners are estopped to
take a stand contrary to the one taken already in a number of proceedings. This is
just one instance of the Petitioners coming with unclean hands to this honorable
Court. (A copy of the writ petition no. 10260/09 is attached herewith as Annex-B)

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J. That the writ petition under reply requires decision of disputed facts for its proper
adjudication. It is therefore respectfully submitted that the writ petition is not
maintainable as it necessitates deeper probe and recording of evidence by this
honorable Court which is not undertaken in exercise of the constitutional
jurisdiction. Notwithstanding Petitioners insistence that facts relating to the CILSuit and MCB-Suit are not germane to the instant writ petition and are
mentioned merely to give context to the writ petition, it is submitted that
ultimately the issues raised in the writ petition are clinched and turn for their
decision entirely on the decision of the facts raised in the aforementioned suits
which facts of the Suits it is respectfully submitted are vehemently disputed by
the parties.
K. That it is submitted that neither Mr. Naqvi, nor Mr. Bhandari or Mr. Riaz is
entitled to represent the Petitioners before the Court. It is submitted that
Vakalatnama brought on record is not attested by two witnesses and therefore it
is inadmissible in evidence. It is submitted that all documents evidencing future
financial obligations are required to be attested by two male witnesses.
Vakalatnama is obviously such a document and therefore requires attestation by
two male witnesses under Article 17 of the Qanun-e-Shahadat Order 1984. In
view of this, Bhandari, Naqvi and/or Riaz cannot represent the Petitioners in the
writ petition under reply.

BASIC FACTS OF THE CASE

I.

That the Bank (the Answering Respondent) on the request of the

Petitioner no. 1 vide Facility Advising Letter No. 14-06-05 (Annex-C as amended
by Facility advising Letter dated. 21-04-2006, Annex-C/1) approved and
extended to the Petitioner No. 1 a short term working capital finance facility by
way of Running Finance of Rs. 250.00 million (Running Finance). The board of

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Directors of the Petitioner No. 1 Company had earlier passed a resolution for
opening and operating a bank account with the Bank (Annex-C/2). A customer
information memorandum dated 22-03-2005 submitted by the Petitioner No. 1 for
the grant of the aforesaid Running Finance is placed herewith as Annex-C/3. The
Running Finance was valid for the period 15-06-2005 till 30-06-2006. In
pursuance of the approval letter dated 14-06-05 (Annex-C above), the Petitioner
No. 1 executed finance and security creating documents.

II.

That subsequently vide Letter dated 22-06-2006 (Annex-D) the

Petitioner no. 1 requested the Bank to renew the aforesaid Running finance
facility for the further period upto 30-06-2007. The said request was acceded to
by the Bank and the Running Finance amounting to Rs. 250.00 million was
renewed and continued for the further period from 01-07-2006 to 30-06-2007.
The formal terms and conditions of the said approval were communicated to the
Petitioner No. 1 vide Facility Advising Letter of the Bank dated 25-07-2006
(Annex-D/1). In pursuance of the approval letter dated 25-07-06 (Annex-D/1
above), the Petitioner No. 1 executed finance and security creating documents.

III.

That as per the Facility Advising Letter dated 14-06-2005, Facility

Advising Letter dated 21-04-2006 and the Facility Advising Letter dated 25-072006 (Annex-C, C/1 and D/1 above), the Running Finance of Rs. 250.00 million
was required to be secured mainly through pledge of shares of eligible listed
companies. Accordingly, Petitioner No. 1 pledged through the Central Depository
System with the Bank the shares of PIAC and various other companies. Later on,
the shares of all other companies except PIAC were de-pledged by the Bank.
Petitioner no. 1 also pledged the shares of DIL with the Bank.

IV.

That as per the approved terms of the Running Finance facility in

terms of the Facility Advising Letter dated 25-07-2006, the Petitioner No. 1 was

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required to utilize the sanctioned limit upto 70% of the market value of the shares
of PIAC and DIL pledged with the bank as aforesaid. On 31-12-2006, the
Petitioner no. 1 had with the Bank shares pledged of an amount of Rs. 249.749
million. Accordingly at that time, the Petitioner no. 1 according to the terms
agreed, could utilize the maximum amount of Rs. 174.37 million out of the
sanctioned limit i.e. 70% of the aggregate value of shares of PIAC and DIL
amounting to Rs. 249.1 million.

V.

That on 31-12-2006, however, the outstanding against the Petitioner

no. 1 was Rs. 249.749 million as against the drawing power available to the
Petitioner No. 1 at that time as mentioned above of Rs. 174.37 million. In the
circumstances, Petitioner no. 1 was advised through Letter dated 16-02-2007
(Annex-E) to bring the situation in order by either reducing the margin existing in
the value of the pledged shares by pledging more shares with the Bank or by
reducing the liability against the Running Finance by making payment of amounts
availed in excess of the entitlement.

VI.

That in response to the aforesaid Letter (Annex-E), the Petitioner No.

1 through its Letter dated 20-03-2007 (Annex-E/1) promised to pay to the Bank
not only the sum of Rs. 40.00 million in four equal installments from 30-04-07 to
31-01-08 but also promised to pay the sum of Rs. 100.00 million through sale of
the shares of PIAC. In the said circumstances, when the Running Finance facility
was expiring on 30-06-2007, and the Petitioner No. 1 had openly acknowledged
its inability to discharge its obligations as per agreed terms before or on the said
expiry date, the Bank as a measure to save the relationship with the Petitioner no.
1 and in order to save the Petitioner no. 1 from experiencing the stark humiliation
of committing a default, bifurcated the aforesaid Running Finance limit of Rs.
249.749 million in the light of undertakings of the Petitioner no. 1 as mentioned in
the Letter dated 20-03-2007 (Annex-E/1 above) into a fresh Demand Finance

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facility of Rs. 140.00 million (Demand Finance) and Running Finance of Rs.
109.749 million (Running Finance Frozen Line). As per the Facility Advising
Letter dated 10-04-2007 (Annex-E/2) the principal amount of the Demand
Finance was to be repaid in four installments of Rs. 10.00 million (each payable
on 30-04-07, 31-07-07, 31-10-07 and 31-01-08). Fifth installment of Rs. 100.00
million was repayable on 30-04-2008 alongwith the mark-up for the whole tenure.
Running Finance Frozen Line was agreed to be kept frozen till 30-04-2008 on
which date the Petitioner no. 1 was required to adjust the same also. As per item
no. 4 under the head of Special Terms and Conditions contained in the Facility
Advising Letter dated 10-04-2007 (Annex-E/2 above), PIAC shares were agreed
to be sold for the purpose of recouping any delayed payment of the agreed
installment of the Demand Finance facility of Rs. 140.00 million. In pursuance of
the approval granted vide Facility Advising Letter dated 10-04-2007 (Annex-E/2
above), the Petitioner no. 1 executed fresh finance and security documents.

VII.

That Petitioner No. 1 however utterly failed to meet its obligations

either under the Running Finance-Frozen Limit or under the Demand Finance at
or before the dates aforementioned. The date of payment was several times
extended in order to accommodate the Petitioner no. 1 to meet its obligations but
Petitioner no. 1 utterly failed to discharge its obligations towards the Running
Finance-Frozen Limit amounting to Rs. 109.749 million. Likewise date of
payment was extended vide the Facility Advising Letter dated 30-06-2008
(Annex-F) in order to accommodate the Petitioner no. 1 to meet its obligations
but the Petitioner no. 1 failed to discharge its obligations notwithstanding
acknowledgement of indebtedness. (Financial Statement of the Petitioner no. 1 for
the year ending 30-06-2008 is attached herewith as Annex-G) and execution of
fresh documents relating to Finance and security creating documents in 2008. The
last extension made vide Facility Advising Letter dated 30-01-2009 (Annex-H)
and Annex-F above was upto 30-04-2009.

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VIII.

That instead of making payment of the acknowledged outstanding

liability (Annex-G above), the Petitioner no. 1 alongwith the Guarantors in order
to create a smoke screen and to raise a red-herring against their default, filed an
utterly frivolous Suit (being the CIL Suit i.e. COS No. 56-B/2009 pending
adjudication in the Lahore High Court Lahore) in April 2009. This Suit was
clearly filed with an eye to the gathering storm i.e. approaching of the last date of
repayment of the outstanding liability i.e. 30-04-2009 and therefore an attempt
was made to ward off the impending doom by a seemingly pathetic effort to claim
damages to the inflated and quixotic tune of Rs. 1313.00 million. In the aforesaid
circumstances, where the Petitioner no. 1 had impliedly refused to settle its dues
by filing a false and frivolous Suit, the Bank had no other remedy but to recover
its dues by having recourse to the Courts. Consequently, the Bank filed the COS
No. 66-B/2009 for recovery of an amount of Rs. 229,465,467.13 against the
Petitioner no. 1. (Copies of Plaints and PLAs filed in the CIL-Suit and the MCBSuit are Annex-J/1 to J/4 )

IX.

That while the Bank has been granted unconditional Leave to Defend
the CIL-Suit, an Interim Decree amounting to Rs. 120.00 million has been passed
against the Petitioner no. 1 in the MCB-Suit. Though the Petitioner No. 1 has
made certain payments under the aforesaid Interim Decree dated 07-07-2009 as
amended on 10-08-2009, it now seems that Petitioner No. 1 has lost stomach to
make any further payment under the aforesaid Interim Decree and therefore the
writ petition under Reply has been filed to create a ploy and pretext for delaying
and ultimately evading its obligations under the Interim Decree aforesaid. This
pattern of behavior is consistent with the past of the Petitioner No. 1 when it filed
the CIL-Suit on the eve of its default date in order to coerce and pressurize the
Bank and to frustrate the lawful claims of the Bank against the Petitioner no. 1
from being realized. (The interim Decree alongwith the amendment thereof are
annexed herewith as Annex-K and K/1).

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PARAWISE REPLY ON MERITS

1. That the averments made in the corresponding paragraph are denied. It is denied
that the writ petition under reply has been validly and competently instituted by
Petitioner No. 2 as Annex-A/1 which is allegedly a certified copy of purportedly a
Board Resolution dated 31-03-2010 is not a certified copy but copy of a purported
certified copy of the minutes of a Board Meeting purportedly held on 31-03-2010.
Annex-A/1 otherwise appears to be a fake document as no date of certification
appears on the face of Annex-A/1. In this view of the matter, the writ petition
being not filed validly and competently and by a properly authorized person is
liable to be dismissed in limine. Further it is denied that the Capital Industries
Limited is a corporate body as Certificate of Incorporation appended with the writ
petition as Annex-A/2 is on the face of it an interpolated document without any
supporting initials appearing on the interpolations. In view of this, the Board
Resolution even if assumed to be valid, cannot be used to authorize the Petitioner
No. 2 to file the instant writ petition as proof of incorporation of Petitioner no. 1 is
wanting. It is further submitted that Annex-A/3 which is a copy of the audited
Annual Accounts of the Petitioner relating to the year 2008-2009 is not a valid
document as it has not been established that the purported auditors are approved
by the Securities and Exchange Commission of Pakistan to undertake audit of the
corporate entities under the provisions of the Companies Ordinance, 1984. In
view of the foregoing objections, the writ petition is liable to be dismissed
forthwith.

2. That contents of the corresponding paragraph are denied as laid. It is submitted

that the Bank (the Answering Respondent) on the request of the Petitioner no. 1
vide Facility Advising Letter No. 14-06-05 (Annex-C above as amended by
Facility advising Letter dated. 21-04-2006, Annex-C/1 above) approved and
extended to the Petitioner No. 1 a short term working capital finance facility by
way of Running Finance of Rs. 250.00 million (Running Finance). The board of

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Directors of the Petitioner No. 1 Company had earlier passed a resolution for
opening and operating a bank account with the Bank (Annex-C/2 above). A
customer information memorandum dated 22-03-2005 submitted by the Petitioner
No. 1 for the grant of the aforesaid Running Finance is placed herewith as AnnexC/3 above. The Running Finance was valid for the period 15-06-2005 till 30-062006. In pursuance of the approval letter dated 14-06-05 (Annex-C above), the
Petitioner No. 1 executed finance and security creating documents. The Running
Finance facility was extended on the requests of Petitioner No. 1 from time to
time till 30-04-2009 but Petitioner No. 1 utterly failed to discharge its obligations.

3. That thee contents of the corresponding paragraph are denied as false and
misleading. In reply it is submitted that in 2005 the Petitioner No. 1 availed the
facility of Running Finance amounting to Rs. 250.00 million from the Bank
against the pledge of shares of eligible companies. In order to accommodate and
facilitate the Petitioner no. 1, the said facility was renewed and restructured on the
request of Petitioner no. 1 several times till 30 April 2009. Notwithstanding a
clear and incontrovertible admission of its liabilities amounting to Rs. 229.749
million (Annex-G above), the Petitioner no. 1 neglected to discharge its liabilities.
Instead of making payment of the acknowledged outstanding liability, the
Petitioner no. 1 alongwith the Guarantors in order to create a smoke screen and to
raise a red-herring against their default, filed an utterly frivolous Suit i.e. COS
No. 56-B/2009 pending adjudication in the Lahore High Court Lahore in April
2009. This Suit was clearly filed with an eye to the gathering storm i.e.
approaching of the last date of repayment of the outstanding liability i.e. 30-042009 and therefore an attempt was made to ward off the impending doom by a
seemingly pathetic effort to claim damages to the inflated and quixotic tune of Rs.
1313.00 million. In the aforesaid circumstances, where the Petitioner no. 1 had
impliedly refused to settle its dues by filing a false and frivolous Suit, the Bank
had no other remedy but to recover its dues by having recourse to the Courts.

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Consequently, the Bank filed the COS No. 66-B/2009 for recovery of an amount
of Rs. 229,465,467.13 against the Petitioner no. 1.

4. That thee contents of the corresponding paragraph are denied as false and
misleading. In reply, submissions made in para no. 3 above are reiterated.

5. The contents of the corresponding paragraph are denied as laid. As far as PLA
against MCB-Suit and defenses taken therein are concerned, the filing and taking
of the same is not denied as it is a matter that pertains to the record of this
honorable Court. However no comments are being offered here on the merits of
the defenses taken by Petitioner no. 1 as mentioned in the corresponding
paragraph since all available objections shall be raised before the proper forum as
and when required. It is however vehemently denied as mentioned in the
corresponding paragraph that the factual controversy between CIL and MCBBank is not germane to the present petition and has been noted only for purposes
of giving context to the instant petition. It is respectfully submitted that all reliefs
claimed in the instant petition turn on the decision of the question whether the
Petitioner no. is a defaulter or not, and this is the very question and controversy
that is involved and presently pending before this honorable Court in the suit filed
by the Answering Respondent i.e. Suit No. 66-B/2009. This writ petition therefore
is not only an attempt to implicate this honorable Court in factual controversy but
also a bold effort to preempt the decision in Suit no. 66-B/2009 by misleading this
honorable Court by filing this writ petition.

6. The contents of the corresponding paragraph are not denied subject to the
qualification that the Interim Decree dated 07-07-2009 was passed by this
honorable Court as part of a consensual arrangement between the parties vide
powers conferred under section 11 of the Financial Institutions (Recovery of
Finances) Ordinance, 2001 (the Ordinance 2001). This does not amount to any

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novation or rescheduling as they are the result of the acts of private parties alone
while the Interim Decree was passed under statutory powers. In fact time was
very graciously allowed to the Petitioner no. 1 for making payment by making the
Interim Decree an installment decree. The Interim Decree it may further be noted
was not made on the merits of the case but as a part of the consensual
arrangement between the parties.

7. That contents of the corresponding paragraph are not denied.

8. That contents of the corresponding paragraph are vehemently denied and

controverted. It is submitted that the consistent stand of the Petitioner no. 1
hitherto as regards the pledge of the shares which comprise the major security of
the Bank has been that no effective pledge was ever created in favor of the Bank.
The said stand of the Petitioner no. 1 is reflected not only in the PLA submitted in
the COS No. 66-B/2009 but also in the writ petition filed by Petitioner No. 2 (writ
petition no. 10260/2009) challenging the constitutional vires of section 176 of the
Contract Act, which writ petition is presently pending in the Lahore High Court
Lahore. As a matter of fact, the Bank-Answering Respondent is grossly overexposed with regard to the amounts that are due from the Petitioner no. 1 as the
security deposited is of far less value than the finance already availed and
acknowledged. The Petitioner no. 1 after denying and refusing to acknowledge the
pledged shares to be a valid security for the finance availed has so far not come
forward with any kind of acceptable security to make its acknowledged
outstanding liability secure. As far as immovable properties as security is
concerned, it is submitted that it is most unliquid and precarious type of security
which was only accepted as a provisional measure. It is very difficult to find a
suitable purchaser quickly and in the meantime the prices of land can go to a
whoopish slump. In view of the foregoing, it is absolutely incorrect and false to

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state that the Bank is adequately secured with respect to the defaulted amount of
Rs. 109.465 million.

9. The contents of the corresponding paragraph are not denied. It is submitted that
organizations like Credit Information Bureau are not new things. Such
organization has always been an integral part of an organized debt market and
always exists in one form or another in all efficient debt markets. In the
beginning, all credit information organizations were private organizations which
were organized and formed by the banks privately. Even today, most renowned
credit information organizations (such as Moodys) are privately managed. The
SBP established the first Credit Information Bureau vide BCD Circular No. 6
dated 15-01-1990. Later on, with the development of technology, electronic CIB
was introduced in 2003. (Copy of Circular dated 15-01-1990 and Circular dated
25-02-2003 of the SBP are attached herewith as Annex-L and L/1).
10. That contents of the corresponding paragraph are denied as laid being false,
misleading and calculated to deceive. It is respectfully submitted that the credit
report of all the customers is provided on regular basis to the SBP. As submitted
above in detail, the Petitioner no.1 after availing the Running Finance willfully
neglected to repay the same. The Bank as a part of its duty under section 25-A of
the Banking Companies Ordinance 1962 and all Circulars issued by the SBP
under the said provision of law made monthly credit reports to the SBP in relation
to the overdues of the Petitioner No. 1. In this regard, the Bank was strictly
discharging the obligations imposed under law and relevant Circulars of the SBP.
The fact of sending a Notice by the SBP to the Petitioner No. 1 is not in the
knowledge of the Bank.
11. The contents of the corresponding paragraph are vehemently controverted and
denied as laid. To begin with, it is submitted that in the Notice (Annex-E to the
writ petition under reply) it is clearly stated that the reply to the Notice must be

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submitted within 30 days to the SBP. It is however evident that the Petitioner no.
1 willfully neglected to make a reply as required and let the time pass and made
his reply as late as 19-11-2009 (Annex-F to the writ petition). By that time, the
name of the Petitioner no. 1, in default of a reply, had been included in the CIB
List. It is further submitted that Petitioner no. 1 is trying to misconstrue the nature
and terms of the Interim Decree dated 07-07-2009. It is submitted that it was a
consensual arrangement. On the one hand Petitioner no. 1 was and still is liable to
pay Rs. 120.00 million in twelve equal monthly installments, failing which,
execution proceedings may be started against it for the recovery of the unpaid
amount. Moreover, the leave granted to him regarding the amount of Rs. 109.465
million is liable to be revoked if it fails to discharge its liability fully with regard
to Rs. 120.00 million. It is further submitted that Leave was not granted on merits
but as part of a consensual arrangement; the amount of Rs. 109.465 million
therefore does not become thereby a disputed amount since that result will only
follow if the leave is granted on merits. That is the reason that the amount of Rs.
109.465 million is still being showed as overdues of the Petitioner no. 1. Contents
of para 6 above are reiterated.
12. The contents of the corresponding paragraph are denied as laid. In reply, contents
of the paragraph 11 above are reiterated.
13. The contents of the corresponding paragraph are denied as laid. In reply, contents
of the paragraph 11 above are reiterated. It is further submitted that Petitioner no.
1 failed to make a reply within the time specified. Later communications of
Petitioner no. 1 were devoid of merits as it was misstating and misconstruing the
facts of the case. The name of the Petitioner no. 1 was rightly included in the CIBList.
14. The contents of the corresponding paragraph are denied as laid. It is submitted
that Petitioner no. 1 failed to make a reply within the time specified. Later
communications of Petitioner no. 1 were devoid of merits as it was misstating and

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misconstruing the facts of the case. The name of the Petitioner no. 1 was rightly
included in the CIB-List.

15. No comments are offered to the contents of the corresponding paragraph as it

relates to the policy of the regulatory authority which is binding on the Bank. It is
however respectfully submitted that credit information throughout the world is
considered to be a private and proprietary material and is not offered to the
borrowers.

16. That contents of the corresponding paragraph are denied. Petitioner has not been
vigilant to protect its rights. The reply to the Notice (Annex-E and F to the writ
petition under reply) was not made within the required time nor any reason for
delay was offered. The Petitioners are not entitled to the aid of this Court of
equitable jurisdiction due to their indolence and gross negligence.

17. The contents of the corresponding paragraph are vehemently denied as false and
the Petitioners are put to strict proof of the same.

18. In relation to the contents of the corresponding paragraph it is submitted that the
policy framed appears to be rational, reasonable and expedient. The Petitioner no.
2 clearly falls in the category described in sub-paragraph (e) of the corresponding
paragraph.

19. In relation to the contents of the corresponding paragraph, it is submitted with

great respect that no justification is provided for the vituperation made against the
Respondent no. 3 in the corresponding paragraph. As a matter of fact, no adverse
action has yet been taken by the Respondent no, 3 against the Petitioner no. 2 and
the writ petition is liable to be dismissed being filed pre-maturely and without any
just cause or apprehension. No grounds or material has been furnished or

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established justifying the phobia of the Petitioner no. 2 in respect of inclusion of

his name in the ECL by Respondent no. 3. In fact no public official should be
restrained from discharging its lawful functions no matter howsoever influential
the culprit is. It is further submitted that to seek to be wiser than the law is the
very first thing that by the good laws is prohibited.

20. That the contents of the corresponding paragraph are vehemently denied. All
actions taken by the Respondents or which they may have occasion to take in the
future were and shall be strictly in discharge of their lawful duties, bona fide and
in accordance with law and the Constitution and require no interference by this
honorable Court.

21. That the reply to the corresponding paragraph is given as below:

a. The contents in the corresponding paragraph are vehemently denied as
incorrect and false. The actual situation has been mentioned above in the
Basic Facts of the Case, paragraph no. I and J of the Preliminary
Objections above and in paragraph no. 6, 8 and 11 above, which are being
merely referred to and not reiterated for the sake of brevity.

b. In so far as the contents of the corresponding paragraph formulate a general

proposition of law, there is no cavil with it. Beyond that, every inference and
insinuation is denied. It is denied that right to obtain credit is a concomitant
part of the right to carry on trade and therefore a Fundamental Right.

c. The contents of the corresponding paragraph are denied as laid. It is

specifically denied that right to obtain credit is a concomitant part of the
right to carry on trade and therefore a Fundamental Right. It is submitted
with respect that the decision of the question whether Petitioner no. 1 is a
defaulter or not is sub judice in a properly constituted proceeding before a

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Court of competent jurisdiction. Present writ petition is a frivolous attempt

by the Petitioners to reagitate the issue of default which has already been
raised in the COS No. 66-B/2009. In view of this, the writ petition is liable
to bed dismissed. It is further submitted that the Petitioner is not entitled to
the aid of this honorable Court in its equitable jurisdiction as the conduct of
the Petitioner no. 1 as mentioned in detail above, disentitles it to any relief
in the equitable jurisdiction of the Court.

d. The contents of the corresponding paragraph are denied as misconceived.

The fact of Petitioners being defaulter is being determined by a Court of
law. It is further submitted that it was Petitioners who filed COS No. 56M/2009 in the Court and chose to go to the Court first. It is further
submitted that according to the policy of the Respondent No. 1-the SBP, the
information provided about a borrower by a member bank to the CIB are
strictly kept confidential and if it is proved that incorrect information is
provided, the member Bank is expelled from the membership of the CIB. In
view of these safeguards, the apprehension of the Petitioners about their
claimed reputation being affected are ill-founded. It is submitted that the
Petitioners by filing one after the other legal proceedings are themselves
instrumental in making their name known as defaulters.

e. The contents of the corresponding paragraph are denied. It is submitted that

liabilities of the Petitioner no. 1 are admitted and therefore it is beyond
controversy that it is a defaulter. If Petitioner no. 1 in its wisdom decided not
to comply with the legal requirements and discharge its obligations, it must
not now complain when it comes to bearing the natural consequences of its
own acts.

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f. The contents of the corresponding paragraph are denied. It is denied that the
CIB-Report is incorrect. In reply, submissions made above in paragraph no.
6 and 11 are reiterated.

g. The contents of the corresponding paragraph are denied. In reply,

submissions made above in paragraph no. 11 are reiterated.

h. The contents of the corresponding paragraph are denied. In reply,

submissions made above in paragraph no. 11 are reiterated
22. That the reply to the corresponding paragraph is given as below:
a. In relation to the contents of the corresponding paragraph it is submitted that
the credit information provided to the CIB is strictly confidential in nature
and is gathered only for the benefit of the member banks which pay a
substantial annual fee for the benefits which they avail under the CIB
arrangement. In this view of the matter, the borrowers who pay no fee like
the member credit institutions are not entitled to the benefits of the CIB
system.
b. The contents in the corresponding paragraph are denied being misconceived.
The CIB Policy is perfectly rational and sensible and therefore lawful and
constitutional. It is submitted that all the private and scheduled financial and
credit institutions have pooled their resources for their own private benefit.
The right to make associations is a Fundamental right and it includes the
right to restrict the membership of the association. In fact there is no concept
of an open-for-all association. It is further denied that the credit report
against any borrower constitutes an indictment which must necessarily be
communicated to the accused borrower. It is submitted that the credit
information regarding a borrower is merely used to put all credit institutions
on warning while dealing with the specific borrower. There is no prohibition
that a negative credit report must in all circumstances be construed as a

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direction not to deal with or accommodate the borrower. Neither a negative

credit report must be taken as a slur upon the reputation of a borrower unless
as in the instant case default is willful. It is further submitted that the
Petitioners have grossly exaggerated the consequences of inclusion of a
borrowers name in the CIB list. It is submitted that in a well established
debt or credit market, there are always sellers of credit ready to offer their
services as capital cannot be kept idle for a long time. The comparison of
inclusion of a borrowers name in the CIB-List with that of conviction in
absentia, it is submitted, is outr and even ridiculous. In the one case, a
citizen loses his liberty, while in the other case, no civil or constitutional
rights are affected.

c. The contents of the corresponding paragraph are denied as false and

misconceived. In essence, the decision to include a persons name in the
CIB-List is merely for the information of the member institutions. It is not a
governmental decision or rather it is not done in the governmental capacity
as it relates and inures to the benefit of mostly private financial institutions.
As submitted above, provision of credit information is an ancient service. It
is only in the modern market economy that it is sometimes organized at
semi-governmental level due to its importance for the financial stability and
integrity of the financial markets of a country and eventually for the
economy of a country as a whole. It is denied that inclusion of a borrowers
name in the CIB-List in any way affects its inherent dignity, mention
whereof has been made in the Article 14 of the Constitution of Pakistan.

23. That reply to the corresponding paragraph is given as below:

a. Needs no reply.

b. Needs no reply.

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c. That contents of above paragraph are controverted and vehemently denied

as false. In reply submissions made above are reiterated without producing
them afresh here in order to maintain preciseness and brevity. Reference is
especially made to the submissions made above in the Basic Facts of the
Case, paragraph no. I and J of the Preliminary Objections above and in
paragraph no. 6 and 11 above.
d. That the contents of the corresponding paragraph are denied. It is submitted
that name of a person is placed on the ECL under the provisions of the Exit
(from Pakistan) Control List Ordinance 1981. Superior Courts in various
decisions have upheld the constitutional validity of the said Ordinance and
has laid down that it does not violate any provision of the Constitution
including the Fundamental Rights. The ECL Policy challenged in the present
writ petition has been framed in the light of various decision of the superior
Courts and under powers conferred under the Exit (from Pakistan) Control
List Ordinance 1981. It is denied that the ECL-Policy violates any provision
of the Constitution, Fundamental Rights, any other law or decision of
superior Courts or principles of natural justice or fairness. It is respectfully
submitted that the Petitioners are raising hypothetical and academic issues
as there is no action yet proposed to be taken against them under the Exit
(from Pakistan) Control List Ordinance 1981. In this view of the facts, the
writ petition is liable to be dismissed as being pre-maturely filed in haste
and to circumvent the due course of law.

e. That the contents of the corresponding paragraph are denied as

misconceived. It is submitted that in order to fairly execute a decree, it is
essential that the judgment debtor be present before the Court so as to take
all objections against the execution at the proper time. It is therefore denied
that for the execution of decree, presence of the judgment-debtor is not
essential. It is very much essential so that Courts precious time be saved

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and all controversies be set at rest once and for all and nobody be allowed
thereafter to raise dead-bodies out of the ground on the pre-text that he/she
was not included in the process of liquidation of his/her property.
f. That the contents of the corresponding paragraph are denied. It is submitted
that section 55 has stood the test of time and is of universal applicability.
With great humility it is submitted that to seek to be wiser than law is the
very first thing that by good laws is prohibited. In any case, one fails to
fathom the ground on which provisions of section 55, CPC are being
challenged as they have no connection with the controversy in issue in the
present writ petition. Since no ground is stated in the corresponding
paragraph for the alleged unconstitutionality of section 55, CPC except
decision of a foreign jurisdiction, the Bank reserves its right to make further
submissions in this regard as and when the grounds and reasons are
disclosed by the Petitioners.
g. That the contents of the corresponding paragraph are vehemently denied. It
is specifically denied that the Bank has sufficient security in respect of the
unpaid liability of the Petitioner no. 1. The allegations raised in the
corresponding paragraph have already been replied to above and no detailed
answer is being made in order to avoid unnecessary repetition and prolixity.
Reference however is especially made to the submissions made above in the
Basic Facts of the Case, paragraph no. I and J of the Preliminary
Objections above and in paragraph no. 6, 8 and 11 above.

PRAYER
In view of the submissions made above, it is most respectfully prayed that the writ
petition under reply being the grossest instance of the abuse of the process of this
honorable Court and a nefarious attempt on the part of the Petitioners to circumvent the

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course of law and further to evade their liabilities merits outright dismissal with special
costs.

RESPONDENT NO.4/MCB BANK LIMITED

Through

SALMAN AKRAM RAJA

M.A. (Cambridge)
LL.M (Harvard) LL.M (London)
Advocate Supreme Court
PLH-3960

SHEHZAD HAIDER
Advocate High Court
PLH-13352

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